What Is A Written Verification of Employment (WVOE) Form? Can it Help Us Get the Mortgage To Buy The Home That We Currently Need? Can It Speed Up the Home Buying Process?

Applying for a mortgage can be overwhelming with all the requests, forms, and procedures. Add in some terms like WVOEWritten Verification of Employment — and it could be even more confusing. We decided to clear a bit of this information up for you. You don’t always need a WVOE to get a home loan. WVOE is another term for Fannie Mae’s Form 1005, a standard form that has been given out for years to verify employment status and income when qualifying borrowers for mortgages.

Do I have to get my employer to complete a WVOE to get a home mortgage?

Not always. You’ve got several alternatives to a WVOE. First, if your employer participates in a few of the industry-wide e-verification programs for income and employment, they will likely have their HR database linked to one of these programs which allow Mortgage Brokers and Lenders to directly verify your income and employment with your signed consent. 

Second, you could get your employment and income verified on the same day online. This is part of Fannie Mae’s Day 1 Certainty program. The Day 1 Certainty program is intended to speed up the mortgage approval and finance process. It offers freedom from paper-based traditional processes, including WVOE (Written Verification of Employment). Your Independent Mortgage Broker can guide you through this process.

What are my alternatives to verify my income and qualify for a mortgage?

You have more alternatives today than ever before to qualify for a mortgage. Understanding your choices is one of the best reasons to work with a qualified, experienced Independent Mortgage Broker, who is a mortgage professional. They can use new tools to get your income verified and qualify you for a mortgage quickly. 

A qualified independent mortgage broker can get your income and assets verified on the same day, all online. This means no more copying the last 2 months of pay stubs or trying to use your phone to take a picture of paper documents. You won’t have to take forms to your employer, and won’t have to spend a fortune copying tax returns or bank statements.

If you’ve heard that you need to fill out a WVOE if you get bonuses, earn tips, or have commission income, this is one great reason to work with an independent mortgage broker. While some lenders may still require this document and written verification, an independent mortgage broker who’s up to speed on paper-free documents and verifications can help you with Day 1 Certainty and other ways to cut down on paperwork that’s often redundant to help you get the mortgage you need to buy the home you want.

Sources

https://portal.ldwholesale.com/portaldocs/yoda/wholesale/Written_Verification_of_Employment.htm

https://www.fanniemae.com/singlefamily/day-1-certainty

 

 

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Is There A Current Program That Will Quickly Enable Us To Buy a Bigger, Better Home? Is an Adjustable Rate Mortgage a Smart And A Safe Solution At This Moment?

Mortgage interest rates have been declining for a while now, so you may not even think about an adjustable-rate mortgage (ARM). There are a few reasons an ARM might make good sense for you financially even with today’s low 30-year fixed mortgage interest rates. ARM interest rates can be up to half a percentage point (or more) lower than a fixed-rate mortgage, especially when it comes to Jumbo ARMs and Super Jumbo ARMs. In high housing cost markets like Los Angeles and Orange County, along with many other high-cost counties in the State of California, a half-point difference in mortgage interest rate could help you to buy a bigger, better house. 

What are the advantages of an Adjustable Rate Mortgage (ARM)?

As long as ARMs offer lower interest rates than fixed-rate 30-year mortgages, you may be able to qualify for a larger loan and therefore, a bigger, better house.

For example, if you wanted to buy a $1 million home, put 20% down, and apply for a 5/1 ARM at 3.35% interest, your monthly payments (excluding taxes and insurance) would be about $3,540. At 3.99% interest and a fixed-rate 30-year mortgage, your monthly principal and interest payments would be more than $3,800.

If there is no difference in interest rate between a 30-year fixed-rate mortgage and a 5/1 ARM, then the ARM won’t help you to qualify for a higher loan amount and a bigger house. 

What are some pitfalls of an ARM?

ARMs come with different terms. Common ARM terms are 3/1, 5/1, 7/1, and even 10/1. The first number indicates the number of years you’ll have your initial interest rate locked in. So, a 5/1 ARM will have the same interest rate and monthly payment for five years. The second number indicates how often the rate can change after the initial rate period. You’ll notice all the common ARMs can have their interest rate change every year after the initial fixed-rate term. By “change”, you’re right — the biggest pitfall with an ARM is the potential for the interest rate, and monthly payment, to go up every year after the initial fixed-rate term.  Watch our short video clip below that explains the 3 Reasons why you should consider an Adjustable Rate Mortgage.

 

 

If you’re interested in an ARM so you can buy the home you want, and save on the compounding effect of interest, you should work with an experienced mortgage professional to locate an ARM that has terms you can understand and live with. ARMs can have caps on the amount their interest rate can go up when the fixed-rate term ends. They can also have a cap on the total interest rate increase over the lifetime of the loan.

Sources

https://www.realtor.com/advice/finance/i-got-an-adjustable-rate-mortgage/

https://www.nerdwallet.com/blog/mortgages/pros-cons-adjustable-rate-mortgages/

https://www.cnbc.com/2019/08/23/why-you-might-want-to-rethink-getting-an-adjustable-rate-mortgage.html

 

https://www.mortgagecalculator.org/calcs/5-1-arm.php

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10 Things You Should Know About Jumbo Mortgages

Like their names, jumbo home mortgages and super jumbo home mortgages are large and even larger. In some counties in the U.S., a jumbo mortgage is any mortgage bigger than $484,350. This isn’t the case in Los Angeles and Orange counties. As higher-priced real estate markets, jumbo mortgages on single-family homes in LA and Orange counties are any amount over $726,525.  A super jumbo mortgage is typically one that is over $1.5M and in higher-priced areas in California, especially Southern California and in Northern California we routinely see super jumbo loans in the $10M to $20M loan amount range.

The size of jumbo loans isn’t the only thing that’s different about them. We’ve put together a list of 10 things to know about jumbo home mortgages:

1) Jumbo loans are “nonconforming” loans. This means they don’t “conform” to the limits for loans that are sold to Fannie Mae or Freddie Mac. These government-sponsored mortgage associations protect lenders against defaults and resell mortgages to investors. 

2) Jumbo loans are non-conforming but still conventional mortgages. A conventional mortgage is a non-government insured mortgage. FHA mortgages have the mortgage insurance insured by the government.

3) Jumbo loan and Super Jumbo loan interest rates can be fixed or adjustable APR (annual percentage rate)

4) Jumbo loan credit scores should be strong. Most jumbo mortgage lenders ask for credit scores of 700 to 720 or higher.

5) Your DTI should be low. Lenders like to see a debt-to-income ratio (DTI) of less than 41% up to 45%. You need to have relatively low debt for a regular jumbo home loan.  However, there are many other Jumbo and Super Jumbo loan options now available with slightly higher interest rates that allow up to 50% DTI ratios.

6) You’ll need cash reserves. Could you cover up to a year’s worth of mortgage payments from your liquid cash reserves? Many jumbo mortgage lenders will ask for documentation of cash reserves.

7) Jumbo mortgages need more documentation. The majority of jumbo mortgages require thorough documentation, including tax returns, investment accounts and bank statements. Business profit and loss information may also be required.  In some cases, Jumbo and Super Jumbo mortgages may be available with limited streamlined documentation such as not using any tax returns, but instead using bank statements and/or profit and loss statements.

8) You may need more than one appraisal. Because jumbo mortgages represent a risk to lenders, they may request a second property appraisal to confirm property value.

9) Higher down payment. You can get a low or even no down payment on some loans, but not for jumbo mortgages. You will need to put down at least 10% of the purchase price up to 20% or more.

10) Interest rates differ. For a long time, jumbo mortgages and super jumbo loans had higher interest rates than conforming loans. But in housing markets like California, you can often find rates competitive with, or in certain cases lower than, the rates offered on smaller conventional mortgages.

 

You can find jumbo mortgages that will fit your needs, home purchase plans, and financial goals. Work with a jumbo mortgage specialist who understands how these larger mortgages are financed and approved. You will soon find yourself owning that dream property you desire.  These jumbo and super-jumbo mortgage loans are also available for non-US Citizens, including both Permanent Residents Green Card Holders, and also Foreign Nationals.  Super Jumbo Loans include those that can be $10 Million or $15 Million or higher loan amounts.

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